Wall Street warns of economic impact as GM strike enters second day

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DETROIT — As the UAW’s national strike against General Motors stretched into its second day and negotiators returned to the bargaining table, economists and Wall Street analysts on Tuesday warned that a lengthy work stoppage could hurt GM and the Michigan economy.

The sides met for about 11 hours Monday before pausing for the night, according to a person with knowledge of the talks. During breaks, union leaders including Vice President Terry Dittes and Region 1A Director Chuck Browning appeared on picket lines and on TV. Dittes told Bloomberg the sides remained far apart on a number of issues.

Browning, speaking to MSNBC from GM’s Renaissance Center headquarters, said the union has “huge issues” regarding use of temporary workers, in addition to demands on health care, profit-sharing and skilled trades jobs.

GM on Sunday said its latest offer to the UAW included more than $7 billion in investment, creation or retention of 5,400 jobs and solutions for two of its four “unallocated plants.” The union, however, was irked that the proposal came with less than two hours left before its deadline, cementing its decision to call the first national strike against an automaker since the financial crisis.

Fitch Ratings on Monday said a short-term strike is not a credit risk, but a prolonged stoppage “could result in liquidity erosion” to the tune of a few billion dollars of cash burn. Fitch noted, however, that GM might be able to make up some lost production in the back half of the year, which would offset some of the losses.

Patrick Anderson, CEO of Anderson Economic Group in East Lansing, Mich., said Monday that if the strike reaches 10 days, the southeast Michigan economy would plunge into a recession.

“We already know suppliers and contractors that are affected, anecdotally,” Anderson said. “Places like Delta Township [outside Lansing] that are reliant on the GM economy, there’s already an effect. If [the strike] gets to the end of the week, we’ll start to see furlough notices at major suppliers, and that’s when things get bad.”

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